The average transaction fee on the Bitcoin network surged above $5 in July 2020. The lowest transaction fee on average for the past 30 days has been about $0.8 on July 5th. The recent spike resulted in a 500% rise to about $5.8 on yesterday.
Many market watchers and traders only follow the increase in the price of BTC. But the increased fee for transactions may have much more critical indications for the overall market.
Transaction fees are in short the price that users have to pay for sending money in blockchains – BTC for example. The costs are often calculated based on the volume of each transaction. While the average transaction fee for BTC has risen about 500% in the past month, miners didn’t experience a considerable rise in their overall revenue.
The miners’ income has been increased from $8.8M on June 30th to $12.1M as of today, which shows only a 50% increase in total revenue, according to Blockchain.com. The most important thing we get from the recent surge is that the network traffic is growing. Looking at the recent rise of BTC price to more than $11K, the 500% average transaction fee rise is not that of a surprise.
The last time we saw a significant rise in the average transaction fee in the Bitcoin network in 2020 was some days after the third Bitcoin halving, which occurred on May 11. The average transaction fee started rising to a year-to-date high of $6.6 on May 19th.
The total transaction fee is another indicator of activity in the Bitcoin blockchain. It shows the total USD value of all transaction fees paid to miners. The factor recorded a year high yesterday on $2.06M and raised the bar above the last year-high of $1.861M on May 21st.
While the recent boost in the average transaction fee in the BTC network has been shocking, it’s dwarfed by the all-time high record of 2017. The highest average price for transactions in BTC’s history was recorded on December 22nd, 2017 on $54.6, which is about ten times bigger than this year’s high.
The recent surge in Bitcoin charts has caused altcoins to follow the path. Ether (ETH), the largest altcoin experienced a price hike to year-high $328 this month, and the activity on the Ethereum blockchain increased as a result. The average transaction fee for ETH rose from less than $1 to about $2 on the 27th of July.